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Tue Dec 25, 2012, 07:48 AM

 

Our Billionaire Philanthropists

Private foundations pay almost no taxes. In exchange for their expansive tax breaks, they are required to distribute 5 percent of their assets every year. And with wealth consolidating ever upward in America, private foundations are growing like topsy. More than 120,000 such groups controlled around $583 billion in 2010...

For all the talk of philanthropists "giving back," private foundations operate with a generous amount of public assistance, thanks to the tax advantages they enjoy...without any significant public claims on foundation largess, the general run of charitable spending in the United States has taken on the protective coloration of American business culture. At every level, charitable grants have come more and more to resemble investment projects, with a specific, measurable return on equity in mind. Among the dozens of sources I’ve interviewed on the state of the foundation world, every one has singled out this trend as a major shift...

This approach is called by various names such as "social entrepreneurship," "venture philanthropy," and "philanthrocapitalism," but it all amounts to rather the same thing: controlling charitable giving in order to produce measurable, "sustaining" and/or profitable results...It doesn’t take much imagination to see that this new blurring of the lines between nonprofit and for-profit activities is bound to create a blurring, also, of the traditional aims of philanthropy—namely, to provide help to the disadvantaged disinterestedly, as opposed to furthering the donor’s business or political goals...

A striking example of this pay-to-play brand of academic research came last year courtesy of the right-wing petrochemical billionaire Koch brothers... the Charles Koch Foundation had pledged $1.5 million to hire new economics professors at Florida State University, on the condition that the Kochs do the hiring themselves. Amazingly, the university agreed to permit the foundation’s advisory committee to select the candidates vying for a teaching slot—and to withdraw the money "if the hires don’t meet ‘objectives’ set by Koch during annual evaluations...." These activities are not recognizable as philanthropy; they merely lend a benevolent gloss to ideological advocacy...

The overarching trends are plain enough: As wealth inequality swells, so do the coffers of private foundations, even as the recession has caused government budgets to shrink...The communities and individuals affected by foundation spending typically have no influence on it at all. This isn’t especially surprising, when you consider that the modern entrepreneurs who establish foundations have typically acquired an allergy to transparency; the best known philanthropists in our age, after all, are Bill Gates, a ruthless monopolist, and George Soros, a hedge fund manager. According to the cult of the alpha executive, the effective business leader makes decisions unilaterally and brooks no opposition. This model of decision-making may pose few real threats when it comes to peddling a terrible Web browser, or inflicting Mr. Paperclip Man on the hapless user of Word. But the public should take note when a billionaire philanthropist‘s tough-guy decision-making effectively sets social policy in ways that can alter the life chances of millions of other people..

In other words, what‘s needed most of all is a recognition that philanthropy must do more than provide charity, as Oscar Wilde suggested in 1891. Foundations still need to supply the desperately needed overcoat, as Wilde did himself, and do whatever they can to address the immediate needs of people in distress. But the real task is to come to grips with the reasons why so many people are left out in the cold in the first place...

http://www.theawl.com/2012/06/our-billionaire-philanthropists



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Arrow 22 replies Author Time Post
Reply Our Billionaire Philanthropists (Original post)
HiPointDem Dec 2012 OP
Egalitarian Thug Dec 2012 #1
JackRiddler Dec 2012 #16
IDoMath Dec 2012 #2
starroute Dec 2012 #7
OneGrassRoot Dec 2012 #3
IDoMath Dec 2012 #4
Schema Thing Dec 2012 #5
IDoMath Dec 2012 #14
OneGrassRoot Dec 2012 #17
IDoMath Dec 2012 #19
OneGrassRoot Dec 2012 #20
IDoMath Dec 2012 #21
caseymoz Dec 2012 #8
hfojvt Dec 2012 #10
OneGrassRoot Dec 2012 #11
IDoMath Dec 2012 #22
CrispyQ Dec 2012 #12
OneGrassRoot Dec 2012 #15
mountain grammy Dec 2012 #6
caseymoz Dec 2012 #9
raouldukelives Dec 2012 #13
Odin2005 Dec 2012 #18

Response to HiPointDem (Original post)

Tue Dec 25, 2012, 09:03 AM

1. Another symptom of the complete disconnect from reality that grips America and

 

is/has spread across the globe. The vaunted Gates foundation was the first organization widely known to have used this model, they may have invented it, they certainly refined and expanded it.

"Charitable giving" has frequently come with strings and throughout history has proven inadequate to the task, but until recently this kind of tax evasion was unlawful and equated with the very worst sort of scumbaggery.

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Response to Egalitarian Thug (Reply #1)

Tue Dec 25, 2012, 12:57 PM

16. However, this is not a new thing at all.

The 19th century robber barons who first made the excellent PR move of converting themselves into "philanthropists" invented this model. Gates is just the latest generation (fourth or fifth) of robber baron to undergo the magical transformation of "giving away" his wealth and yet, miraculously, maintaining control over what he "gave away" and watching it grow every year (even as a few billions are invested in future business ventures, like privatizing US public education and testing out medical treatments on Africans).

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Response to HiPointDem (Original post)

Tue Dec 25, 2012, 09:05 AM

2. For the most part I don't have a problem with this...

 

There may be tax mechanisms I'm not aware of but, when I give to charity I get the double joy of knowing that I am furthering my own political agenda (environmentalism) and depriving the government of war funds.

The last paragraph is interesting, though. I'm not sure how to set the system to encourage that.

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Response to IDoMath (Reply #2)

Tue Dec 25, 2012, 10:48 AM

7. These "private foundations" are not ordinary charities

I very much doubt you're contributing to The Bill and Melinda Gates Foundation -- or even any more environmentally-oriented equivalent. This is a different kettle of fish altogether.

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Response to HiPointDem (Original post)

Tue Dec 25, 2012, 09:31 AM

3. It comes down to intention...and intrinsic greed, imho.

Our capitalism-run-amok system promotes and rewards greed. Simple as that.

Of the people with the means and resources to help others, authentic generosity is rarely leading the way as far as their decisions. There are exceptions, and certainly aid and assistance is provided as a result of the philanthropy which is wonderful, but most people who "give" in a big way do so because of tax exemptions and other enticements, not an overriding desire to help others.

I know that's not important to others, but it is to me. So much more good could be done, and the reason why philanthropy is needed could be greatly diminished, if honesty and authenticity were part of it, rather than philanthropy being viewed as yet another financial transaction and investment.

That's why justice is so much more important than charity. Relying on genuine, ongoing "charity" of others who have their own agenda won't solve anything, though it may ease suffering along the way. Again, relieving suffering along the way is always appreciated; it's just that this greedy system not only creates the problems to begin with, it perpetuates it via injustice masked as "charity" and "philanthropy."

Bookmarked. K&R

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Response to OneGrassRoot (Reply #3)

Tue Dec 25, 2012, 10:15 AM

4. Can we talk definitions?

 

Your language interests me. You use the phrase "helping others" and at least imply that charity should not have an agenda.

I give over 500 hours a year to wildlife rehabilitation/education organization. I also give cash and equipment. If you ask me why, it's not because I want to help people. I want to help animals and I want to change the world and people's minds and hearts so they stop trashing the planet. The time I give a humanist legal organization has nothing to do with wanting to help others - I calculated that I had to give some time to that side of the equation. If I can't get people to stop being shitty to each other I had no hope of getting them to stop being shitty to animals. If humans died out tomorrow, I'd call it a victory.

So, am I being charitable? Am I being philanthropic? Do I deserve a tax deduction for my expenses and contributions? Keep in mind that I am a small giver - a drop of water in an ocean if you will.

Please believe, I don't have my back up. This question is part of a larger puzzle I'm trying to solve regarding taxes, non-profits and charities. I'm just interested in your views.

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Response to IDoMath (Reply #4)

Tue Dec 25, 2012, 10:21 AM

5. You may not have your back up, but you seem to be injecting yourself into a


story about billionaire "philanthropist". Why?

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Response to Schema Thing (Reply #5)

Tue Dec 25, 2012, 12:34 PM

14. It's part of a larger subject

 

Which includes calls to tax churches. Right now non-profits and charitable orga are a relatively simple structure. They are all treated similarly. Hurt the big and you hurt the small. I realize the system may be broken but I'm not sure how to fix it without making it more complex and worse.

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Response to IDoMath (Reply #14)

Tue Dec 25, 2012, 01:08 PM

17. I don't feel non-profits are simple structures any longer...

They're very complicated, imho, and not much different from any corporation now. The work itself is often derailed by the incessant need to raise funds and cover administrative costs.

I don't know how to fix anything either, but recognizing and bringing the systemic problems to light, and getting our priorities straight as it concerns the gross wealth inequality and where our tax dollars go, would be a good start.

The non-profit world, like Wall Street, is so easily manipulated for the benefit of a few, unfortunately. There are wonderful organizations, but there are so many now that efforts are often fragmented and, again, it's easy for greed to take hold.

I'm personally more inclined to integrate everything. Why should "doing good" be separate from one's means of generating an income? Social enterprises are doing philanthropic work while simultaneously generating jobs.

Like everything, there are no doubt many different ways to approach a problem -- and we must multitask and deal with the systemic issues while simultaneously taking care of critical needs -- but to leave things as is isn't an option to me.


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Response to OneGrassRoot (Reply #17)

Tue Dec 25, 2012, 10:59 PM

19. Well, I think that's a matter of perspective.

 

At the core the income tax system seeks to tax profit in the year it is made. Our taxable entities can be divided into two types - profit and non-profit.

Profit entities include individuals, sole proprietorships, partnerships and various corporate forms. The defining factor being that some "person" ultimately receives the income for his, her or its own use.

Non-profit enitities are characterized by the fact that the profit never reaches a 'person'. There are no shareholders, partners or owners to pass the profit too. As a result, non-profit entities are not taxed (unless they have unrelated business income).

Non-profits can be further divided, roughly as "charitable" or "non-charitable" (i.e. political) entities. In the case of charitable entities, their donors get to deduct their donations from their income.

Yes, manifestations, interactions, management etc can get pretty complicated but the basic idea behind what/ who is getting taxed is pretty simple;

Income can;

1) Reach an enduser and be taxed or
2) Go to a non-profit entity and be used for some non-personal use. (There is a big grey area in here as for-profit entities can become non-profits and do a lot of money shifting. HMOs are good example of this.)

If the income is shifted into a non-profit form we can ask the further question - is it going to some greater, common good? Thus, the 501(c)(3) description of the types of entities generally recognized as charitable. I've always seen the principle as "you will give a portion of your income to the greater community either through your taxes or through some form of charitable giving." Most churches do engage in charitable work. But, then, so has the KKK. We deny the charities the right to do lobbying and engage in politics, if they do they become 501(c)(4) or other and their donors lose their deductions.

So, I'm having a hard time differentiating a way to separate out religious institutions from others and tax them other than what we now do..

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Response to IDoMath (Reply #19)

Wed Dec 26, 2012, 08:33 AM

20. I see you're super focused on the structure itself...

If you aren't aware of them, you may want to research some of the new legal entities, such as L3C, created for social enterprise. That particular structure is a hybrid of for-profit and non-profit but others are cropping up in different states as alternatives.

Not sure if that will help or cloud the issue for you even more, but thought I'd mention it.

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Response to OneGrassRoot (Reply #20)

Wed Dec 26, 2012, 09:34 AM

21. Good info

 

That sounds messy to me, I will have dig into that.

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Response to IDoMath (Reply #4)

Tue Dec 25, 2012, 11:05 AM

8. That's not what you can call philanthropy anyway.


"If humans died out tomorrow, I'd call it a victory."

That's the very opposite of philanthropy. That's misanthropy. And I don't know why fellow human beings shouldn't despise you.

Off topic: I'd call myself an environmentalist, but if humankind goes extinct, I don't care if the whole damn planet falls into the sun. To me it's like the tree that falls in the forest. Nobody can hear it, and nobody cares.

Human beings are my friends, family, ancestors, sons, daughters, nephews, nieces and grandchildren. I have no identity that isn't within the context of them. If I fight to preserve the planet, it's for them. If they're not going to be there, I have no reason to preserve the planet.

For animals? Why should they mean more? There's no way they can. If I reject other human beings, there's no way my love for other animals is true. It's just my pretense, making me feel that my hatred has a higher cause.

The hateful always crave that.

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Response to IDoMath (Reply #4)

Tue Dec 25, 2012, 11:20 AM

10. "if humans died out tomorrow, I'd call that a victory"

classic liberal there. Save the snail darter!! (amen) Save the human race? (meh) Snails > humans.

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Response to IDoMath (Reply #4)

Tue Dec 25, 2012, 11:39 AM

11. I agree...definitions are very, very important.

I wish we could discuss them more often, because words often mean different things to different people, so solving issues is very difficult when we're not on the same page about verbiage.



This may go off on tangents, so please bear with me as I attempt to answer your question.

The definition of philanthropy is a desire to "benefit the welfare of others." Like so many words, I think the perception of the word philanthropy has morphed over time.

I don't consider millionaire/billionaire philanthropy in the same category as that of the average person. Many average citizens do contribute their time, money and resources with the primary intention of benefiting the welfare of others (human, animals, the environment, etc.) I don't believe that can be said about many of the wealthiest among us.

My point was that if the good deed/giving is done with the primary intention of it benefiting the person GIVING in some concrete way (tax exemption..$$$$), rather than the primary intention being to benefit OTHERS -- the true definition of philanthropy -- that is a problem, as I see it.

Even if the recipients benefit along the way, I believe the selfish overriding intention being financial is a systemic problem that manifests in many ways. Until those with resources recognize the concept of The Common Good and truly benefiting the welfare of others -- and how they and their loved ones also benefit by helping others -- the obscene wealth inequality and injustice will continue. (Sure, the wealthy can live in gated communities which separate themselves from some of society's ills, but if a disease outbreak occurs due to lack of proper healthcare for the general population, unless they live in a bubble, they and their loved ones are also potentially affected.)

You wrote: I give over 500 hours a year to wildlife rehabilitation/education organization. I also give cash and equipment. If you ask me why, it's not because I want to help people. I want to help animals and I want to change the world and people's minds and hearts so they stop trashing the planet. The time I give a humanist legal organization has nothing to do with wanting to help others - I calculated that I had to give some time to that side of the equation. If I can't get people to stop being shitty to each other I had no hope of getting them to stop being shitty to animals. If humans died out tomorrow, I'd call it a victory.

So, am I being charitable? Am I being philanthropic? Do I deserve a tax deduction for my expenses and contributions? Keep in mind that I am a small giver - a drop of water in an ocean if you will.


Well, you present an interesting question indeed! I need to sit with this to really clarify how I feel, but here are my initial thoughts.

I still view what you are doing as genuinely philanthropic and charitable. It's not about YOU benefiting financially from the time, resources and money you give. That's not your focus or intention in doing what you do. You're offering your time, resources and money to help animals and the environment. Of course, when any of the issues we believe in and donate to are successful, it obviously helps us as residents on this planet.

More and more people recognize that it's all connected, therefore helping others (including helping animals and the environment itself) IS ultimately helping ourselves. I suppose we can get into a discussion of semantics about what is selfish, but hopefully you understand what I'm saying.

I hear what you're saying about the human species and the pain and suffering we inflict upon other humans and other life forms. Trust me...I really hear you. I think your fairly inflammatory comment that "If humans died out tomorrow, I'd call it a victory" takes away from the topic at hand.

When I say "helping others," I don't limit helping to only human beings. I see everything as connected. We're each drawn to different issues about which we choose to invest our time and energy -- and if we have it, money.

So, yes, I see you as charitable and philanthropic, because you are not doing so in a greedy or selfish way. And, if you benefit from it with a tax exemption, that's fine, because that is secondary, not your primary reason for doing what you're doing. I don't believe that's the case with many millionaires/billionaires.

I will also say this: I personally thinks it's a good thing when we recognize a need and want to be of service to any issue or cause. But to want to help one life form while simultaneously hoping another is destroyed is counterproductive.

I'm not trying to be all Pollyanna or anything like that. I simply genuinely believe everything is connected.

Hope this makes sense.



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Response to OneGrassRoot (Reply #11)

Wed Dec 26, 2012, 11:04 AM

22. Excellent answer

 

I threw up some distracting flares but you cut through to the core.

I do what I do because I care about something (if not someone) beyond myself. The tax benefit is indeed secondary. (But I do get a warm fuzzy thinking I am somehow depriving our bloated military of a few bullets.)

Some of the big guys undoubtably do it for some tax advantage. I think these are generally marked by their lack of imagination. I made a decision a while back not to give to to medical or children's charities. Not because I think they are unworthy but because they are "easy and safe." All the big corporate givers can an do give to these charities. They are uncontroversial. No one can fault you for giving to children. Thus, I encourage small donors to give to small, local charities because those orgs get overlooked by the big donors. Both of the orgs I work for could run for a lifetime on the annual budget of some of the big orgs.

If these big donors were really interested in philanthropy, they would be empowering and building up these small orgs instead of just sustaining the big existing ones.

The problem, though, is that removing the tax benefits would have a seriously detrimental effect on our non-profit sector. Small donors and large would cut back. That tax deduction pushes a lot of people over the line to give when they are hesitating.

So, even if they are doing it for the wrong reason, at least they are still doing it.

The challenge is to catch them looking for a Return on Investment. When a non-profit sells merchandise it treads a line where it may have to declare those sales as 'unrelated business expenses.' You buy the t-shirt to show your support but you get something of value for your donation, thus, no tax-deduction. These big manipulaters are getting something of value to them for their donations and they shouldn't get the tax advantage. But how exactly do we measure that and where do we draw the liine?

For example, a donor may contribute to Notre Dame and insist that the professors hired be of the Jesuit or Franciscan order. He clearly has an agenda and he might feel he is getting a spiritual reward but I can't see a direct economic return. On the other hand, he might be the owner of Fox News, insist on hiring approval for new professors because he is sneakily creating the Fox News Intern Pool and he is getting a bunch of candidates perfectly trained for his needs. There is still *some* separation there, though and questions of business ethics often turn simply on the amount of separation and crossover that goes on.

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Response to OneGrassRoot (Reply #3)

Tue Dec 25, 2012, 12:11 PM

12. +1

"In a just society, there is no limit to how high one can climb, but there is a limit to how far one can fall."

~Jared Bernstein, author of "All Together Now: Common Sense for a Fair Economy"

Get as rich as you want, but not until every human has three hots & a cot, health care, education & child/elder care. Then you can start accumulating wealth. But while little kids are looking for ants to eat in Darfur & the Koch's are wallowing in billions, we have no right to call ourselves "humanity."

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Response to CrispyQ (Reply #12)

Tue Dec 25, 2012, 12:46 PM

15. Well said, thank you. Great quote! :) n/t

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Response to HiPointDem (Original post)

Tue Dec 25, 2012, 10:25 AM

6. Absolutely fascinating! I've been watching this trend for years

and talking about it. Seeing it happen in my own little town. Thanks for this post, I'll have more to say later, need to cook Christmas breakfast.

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Response to HiPointDem (Original post)

Tue Dec 25, 2012, 11:07 AM

9. Thank you for making these well-informed points.


It's about time we take a look at how Randian these "charitable" foundations really are.

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Response to HiPointDem (Original post)

Tue Dec 25, 2012, 12:22 PM

13. Very insightful.

As always, right back to Wall St. Many of these "philanthropists" and charitable organizations are fueled by corporate investments. The desire to do well towards others, to have the world be a better place because of you and not in spite, is a common desire of most rational people.
When someone has spent their time on this earth, their very life, supporting and investing in death, in forced labor for children, in climate change, defense contractors, GMO's, pharmaceutical companies, profiting when a health care claim is denied, it can carry a heavy load, especially late in life. History bears that out as well as the article points out, with our historical philanthropists not being as aware of the damage they were causing until it was done and then spending every filthy dollar they owned to hold out hope of forgiveness. Today, many of those profiting and relishing in gains from those avenues are more aware of the damage they are causing. They know full well going in what they desire to leave as a legacy to the wildlife and future generations. The need for cleansing is at an all time high.
Reading this article made me think of the Winchester Mystery House. Wealth of insidious means, fueling insanity, leading to wasteful choices and doorways to nowhere.

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Response to HiPointDem (Original post)

Tue Dec 25, 2012, 04:46 PM

18. Foundations are tax shelters first, reputation-promoters second...

...And charities a distant third. They exist to protect the 1%'s wealth from taxes under the cover of charity.

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